Editorial: Much at risk in Nike case

Published on October 21, 2002.

The U.S. Supreme Court needs to take a hard look at how the California Supreme Court is applying the state's false advertising laws to public debate between corporations and their critics. And it must reject the California approach as an unfair burden on speech.

The issue was brought on appeal to the high court last week by sports shoe and apparel marketer Nike, the first business-but almost certainly not the last -that would feel the sting of the new California court policy.

Under attack for alleged "sweatshop" conditions in overseas plants, Nike rebutted its critics in, among other things, letters to the news media and op-ed pieces. Last May, in a 4-3 split opinion, the California State Supreme Court held that Nike's comments on its "corporate responsibility" policies were "advertising." As a result, Nike was ordered to establish the truthfulness of its "ad claims" in the California courts. No similar obligation was placed on the critics of Nike's policies.

You will hear no objections to false advertising laws here. They are the bedrock for fair competition among marketers, to say nothing about protecting consumers from deception and outright fraud. But in a society where free expression and freewheeling public debate is part of our hallowed constitutional tradition, applying false advertising laws to debates over corporate policy is strong medicine. We accept such laws, but they impose legal duties and legal penalties on speakers, and allow government censorship, in ways we would never tolerate for other forms of speech. For that reason, regulators and courts are normally careful about where advertising law is applied.

Although the lines are blurring, there is still a distinguishable difference between the paid-for promotion of a corporate brand and a corporation's spokespeople offering statements to the media to explain their organization's position. If the latter is to be defined as advertising the implications are far reaching-possibly even impacting corporate executives' rights to free speech.